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Conversion from LLP to Private Limited Company
In India, private companies are one of the foremost common sorts of business structures. they supply higher chances of growth, development and are best for raising equity capital which isn’t possible just in case of LLP. LLP structure isn’t suitable if the owners require speculators or private equity investors to take a position in their company as they might prefer to invest during a private Ltd. and not a partnership or LLP. The second reason for conversion is that the FDI just in case of a personal Ltd. doesn’t require any approval it is often done directly unlike in an LLP. Especially if the promoters or owners of the corporate are NRI’s or a foreigner incorporating a personal Ltd. may be a preferable choice over an LLP. Hence conversion is mandatory if the above-mentioned requirements got to be fulfilled.
Benefits of converting LLP into a limited company
- Easy Fundraising: The stringent registration process makes this structure more credible among others which makes fundraising or borrowing from external sources easier. The organization itself provides a variety of the way to boost funds is sort of private equity, ESOP, and more.
- Separate Legal Existence: The separate ownership and management help both – the corporate and therefore the management to specialize in their potential works. The shareholders assign responsibility to work and run the corporate without losing control in sort of voting.
- ESOPs to employees: Only private limited companies offer stock ownership and ESOP plans. It attracts employees because it creates an incentive for them to figure within the company and advantage with its growth and prosperity.
- Limited Liability of Owners: The obligation or debts of the corporate doesn’t create a charge over the owner’s personal assets. Their liability is restricted only to the capital subscribed and unpaid by them.